Costco v. Omega: Extraterritoriality lives to fight another day

by Orlando Lopez

December 17th, 2010

In a 4 to 4 Per Curiam decision, the Supreme Court affirmed the 9th Circuit decision stating that there is no first sale defense for acquirers of gray market goods made abroad. The Supreme Court decision is not precedential and allows another attack on extraterritoriality, that is, the lack of IP rights exhaustion when acquiring goods made abroad. The present rulings, the 9th Circuit decision in Omega v. Costco and the Federal Circuit decisions on effect of extraterritoriality on patents, leave the gray market sellers and the refurbishers of patented products without protection if the goods are made abroad . While this outcome appears to be a fair outcome, it has an impact on other sellers of goods, such as Intel. The Supreme Court’s non-decision leaves the door open for reviewing the issue some other time. So, Extraterritoriality, do not put away the fighting gloves!